Starting a business in Germany can be complicated, but it is possible. In fact, Germany has one of the most stable and vibrant economies in Europe. There are many advantages to setting up a business here, including low taxes and good infrastructure. However, you should have an understanding of what's required before starting your own company: the costs involved, legal requirements, and more. In this article, we'll cover everything from registering your company to choosing a name for it—and much more!
Things to Consider
When considering the legal structure, you should consider the type of business you are starting. For example, a sole proprietorship is acceptable if you plan to sell goods or services directly to consumers. However, if your business will sell products or services to other businesses then a limited liability company (GmbH) would be better suited for you. Additionally, people who are unsure about their future plans may want to start off with an unlimited partnership or sole proprietorship and later convert it into another entity after gaining more experience and capital.
Having decided on your legal structure it is time to choose a name for your company -– one that best conveys its mission and brand identity –- which can be difficult because there are so many choices! In Germany it’s recommended that names contain no more than 30 characters and no punctuation marks other than hyphens (-) between words; additionally, they must end with ‘Gesellschaft mit beschrankter Haftung’ (limited liability company), ‘Betrieb mit beschrankter Haftung’ (limited liability company), ‘Kommanditgesellschaft’ (commanding limited partnership) or any other variation depending on what kind of entity you have chosen as your primary one
GmbH & UG Requirements
As a foreigner coming to Germany, the two most common types of companies you will encounter are GmbH and UG.
The GmbH (short for Gesellschaft mit beschränkter Haftung) is a limited liability company. It differs from other business structures in that it offers its shareholders protection against personal liability. If your company goes bankrupt or loses money through bad investments or something similar, your personal assets won’t be at risk.
The UG (Unternehmergesellschaft) is a limited partnership with at least one general partner who is personally liable for all debts incurred by the partnership. The other partners are usually passive investors whose only obligation is to contribute capital to the business venture without having any say in how their investment gets spent or how operations are conducted on a day-to-day basis
In order to start a business in Germany, you must have the minimum required capital. The amount of this initial capital depends on the type of company you wish to establish. There is also an option for founding a cooperative or society without having any founder's capital at all. You can calculate your minimum investment requirement using our online calculator, which will also explain how much money you'll need to get started.
If you don't have enough money for your minimum investment requirement, one alternative is crowdfunding using platforms like Kickstarter or Startnext (in German) that allow investors from around the world to fund projects they believe in through social media campaigns with prizes such as exclusive items from companies' production lines or personalized thank-you notes from founders themselves! This can be an effective way for new entrepreneurs who lack access to traditional lending sources like banks because they are young and inexperienced yet still want some help getting their businesses off the ground."
Registering your Company
To register your company in Germany, you will need to contact the following offices:
Social Security Office
Health Insurance Office
Business Name and Office Address
Your business name must be in German. The only exceptions are if your primary market is international, or if you can prove that your customers won't be confused by the use of another language.
The name must also be unique; it cannot have been used by another company (living or dead) in Germany within the last five years before you filed your registration papers. It also has to be available for use under German law; this means that no other entity in Germany may have registered a similar trademark either.
Finally, make sure that your business name does not mislead customers into believing that they're dealing with someone else—for example, registering a company called "Apple Computers" might lead users to think they're buying from Apple Inc., when in fact they're dealing with an entirely different entity altogether. Also keep in mind how long and short names are generally perceived as being more professional than their shorter counterparts (i.e., "Steuerberater" vs "Beratung").
What is a Pre-Incorporation Contract?
A pre-incorporation contract is an agreement between two parties that sets out the terms of their relationship before they form a legal entity. Unlike in other countries, it is not necessary to enter into one in Germany. They may be used when starting up as an alternative to setting up limited liability companies (GmbHs) or stock corporations (AGs).
Purpose and Contents of a Pre-Incorporation Contract
The purpose of such contracts is to ensure that all parties know what they are getting themselves into before they make any commitments. The details include:
who are each party's representatives with authority over decisions and actions on behalf of the company;
whether any additional shares will be issued before registration occurs;
how much money each party has invested so far; and
what happens if one party decides not to continue with their investment plans due to unforeseen circumstances (such as lack of funds).
Notarization: A notary is someone who can verify the authenticity of a document. Notarization is required for any document that will be used abroad, such as when you are applying for a work permit or opening a bank account. You can request this service at any German consulate or embassy in your home country prior to your departure from Germany. It is also possible to have your documents notarized by an attorney-at-law after arriving in Germany (this would cost more than going through a consulate).
GmbH Registration at the Commercial Register
To register your company in Germany, you will need to submit a copy of your company’s constitution and pay a fee. You can do this online by using the German Commercial Register's online platform (Verkehrszulassungsamt).
Starting a business in Germany can be complicated, but it is possible.
Starting a business in Germany can be complicated, but it is possible. You need to be aware of the legal requirements and have a good business plan, team, and idea.
Startup costs can be high: The startup costs for your company will depend on what type of business you are starting and how much money you want to invest. With that said, there are still many ways to reduce these costs such as using shared office spaces instead of renting or leasing an office space yourself.
Know the law: Before starting any type of business venture in Germany, it's important that you understand the laws surrounding this type of activity so that you don't end up breaking them unknowingly later on down the road (which could lead to costing more money).
The process of starting a business in Germany can be complicated, but it is possible! By preparing yourself and following the steps above, you will be on your way to becoming an entrepreneur.